Late last week, the Organization of Petroleum Exporting Countries (OPEC+) announced at an international press conference that it was reducing the production of oil by two million barrels per day. This has been the biggest cut since April 2020. During the press conference in Vienna on Wednesday, Saudi Arabian Minister Prince Abdulaziz bin Salman, said that the decision was to preserve OPEC+’s oil reserve.
What does this mean for the world? The move by OPEC+ is most likely to push up the already high price of global energy prices. Why do the United States and Europe see it as an attempt by OPEC to help her member country Russia pay for the war in Ukraine, developing countries will see it as a major stressor on their already limited fiscal space.
Liberians should begin to tighten their belts and get ready for this jet ride just in case the 2 million barrels cut a day starts to filter to the region. The government is already feeling the financial pinch from the subsidy placed on the importation of rice.
Fuel prices are expected to go up and to be followed by a hike in transportation fares. This will have a trickle-down effect on domestic and international businesses. Market women bringing agricultural produce from upcountry are expected to wrestle with drivers- likewise, consumers must get prepared to face higher prices in the near term.
The ripple-down effect could have a wide range of economic and financial consequences on a host of industries. Production in the service and manufacturing sectors is expected to take a hit. The impact of the global supply chain and prices for imported goods could also undermine consumers’ choices thereby worsening the situation regarding the importation of rice and other demand-driven commodities.
The Ministry of Commerce must take the lead in designing methods and approaches to remedy the situation. The framing of communication and information dissemination just in case this goes into effect must be done with exceptional caution. Meeting with petroleum importers can also help provide additional information and useful pathways for addressing fuel shortages or higher prices.
As this is not a domestically borne situation, Liberians should see these global crises as an opportunity to rethink the ways they do things. We should for once reexamine what we eat or better still grow what we eat and stop relying on foreign importation of rice. Carpooling is another intervention that could lower the cost of transportation. During the depression of 2008-09, millions of Americans carpooled to work daily.